Automation for goods and services has reached record levels in society. Examples are everywhere from online banking and purchasing to a wide-range of devices and physical appliances that include computing and networking capabilities, which were just wishful dreams only a decade ago. Moreover, businesses and kiosks are increasingly accepting credit, debit, and gift cards as a form of payment. In fact, even alternative payment solutions are now commonplace, such as PayPal™ and others. Customers can even pay vendors via an email.
As a result, cash is being carried and used by customers less and less. This is convenient for the consumer and for the businesses because consumers are more likely to spend with alternative forms of cash than with cash. However, this convenience is not without issues.
Specifically, credit and gift card fraud is rampant, and businesses are continually looking for procedures or mechanisms to limit their exposure to fraud.
Furthermore, most third-party gift cards or credit cards do not require any information other than an account number to make a purchase. When used at a Point-Of-Sale (POS) terminal operated by a cashier this situation does not present any problem, since customer must physically present the card being used to the cashier and in some instances the cashier may additionally request a form of identification to ensure that the card being used matches the customer presenting the card. However, when a card is used at a self-service terminal (SST) or even over the Internet, a customer does not have to necessarily be in possession of the payment card. Thus, some nefarious individuals can guess at card numbers based on suspected patterns or based on previous visual inspection of a valid card (such as by waiters in restaurants that physically take cards for payment). There is no validation at these SST's or via Internet payment, which means that the likelihood for fraud increases in these situations.